What is the expected return for asset A?
A) 1.2%
B) 4.0%
C) 8.0%
D) 8.8%
E) 9.3%

Name: What is the expected return for asset A? A) 1.2% B) 4.0% C) 8.0% D) 8.8% E) 9.3%
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Question

Quizplus · Accepted Answer

Based on the CAPM model, the expected return for asset A is equal to the risk-free rate plus the beta of asset A multiplied by the market risk premium. Thus, the expected return for asset A is 2% + (0.8 x 10%) = 8.8%. Therefore, choice D is the best choice.

What Is the Expected Return for Asset A